Kinsale Capital (KNSL) - 2025 Q2 - Quarterly Results

Kinsale Capital Group Q2 2025 Earnings Report Financial Highlights Kinsale Capital Group reported record net income and net operating earnings for the second quarter of 2025, driven by disciplined underwriting and technology-enabled expense management Q2 2025 Key Financial Metrics vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $134.1M | $92.6M | +44.8% | | Diluted EPS | $5.76 | $3.97 | +45.1% | | Net Operating Earnings | $111.4M | $87.4M | +27.5% | | Diluted Operating EPS | $4.78 | $3.75 | +27.5% | | Gross Written Premiums | $555.5M | $529.8M | +4.9% | | Net Investment Income | $46.5M | $35.8M | +29.6% | - The company's Chairman and CEO, Michael P. Kehoe, attributed the record results to the continued execution of their strategy focused on disciplined underwriting and technology-enabled expense management[3] - Net income for Q2 2025 included $2.9 million in after-tax catastrophe losses, slightly higher than the $2.7 million in Q2 2024[2] Results of Operations The company's operational results showed growth in underwriting income and net investment income, with an improved combined ratio reflecting better loss and expense ratios Underwriting Results Underwriting income increased to $95.5 million with the combined ratio improving to 75.8%, benefiting from higher favorable development of prior year loss reserves - Gross written premiums increased by 4.9% in Q2 2025, driven by strong submission flow but partially offset by a 16.8% decline in the Commercial Property Division[4] Underwriting Performance (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Underwriting Income | $95.5M | $76.1M | | Combined Ratio | 75.8% | 77.7% | | Loss Ratio | 55.1% | 56.6% | | Expense Ratio | 20.7% | 21.1% | - Results for Q2 2025 included $15.4 million (3.9 points) of net favorable development of loss reserves from prior accident years, an increase from $9.5 million (2.8 points) in Q2 2024[7][10] - For the first half of 2025, the loss ratio included 3.4 points of net catastrophe losses, primarily from the Palisades Fire, compared to just 0.6 points in the first half of 2024[8] Investment Results Net investment income grew 29.6% in Q2 2025, driven by growth in the investment portfolio funded by strong operating cash flows Net Investment Income Growth | Period | 2025 | 2024 | Growth | | :--- | :--- | :--- | :--- | | Second Quarter | $46.5M | $35.8M | +29.6% | | First Half | $90.3M | $68.8M | +31.3% | - The increase in investment income was primarily driven by the growth of the investment portfolio, which is funded by strong operating cash flows[11] - The investment portfolio's total value reached $4.6 billion at June 30, 2025, maintaining a high credit quality ('AA-') and a weighted average duration of 3.1 years[11] Other Financial Items The effective tax rate increased, stockholders' equity grew to $1.7 billion, and the company repurchased $10.0 million of its common stock - The effective tax rate for the first six months of 2025 was 20.4%, up from 17.3% in the same period of 2024, primarily due to a lower volume of stock option exercises[12][13] Stockholders' Equity and Book Value | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Stockholders' Equity | $1.7B | $1.5B | | Book Value per Share | $73.93 | $63.75 | - During Q2 2025, the company repurchased 23,309 shares of common stock for a total cost of $10.0 million[15] Non-GAAP Financial Measures This section provides definitions and reconciliations for non-GAAP measures, including Net Operating Earnings and Underwriting Income, to compare underlying business performance Net Operating Earnings Reconciliation This table reconciles GAAP Net Income to the non-GAAP measure of Net Operating Earnings by adjusting for after-tax investment-related gains and losses Reconciliation of Net Income to Net Operating Earnings (Q2 2025, in thousands) | Description | Amount | | :--- | :--- | | Net Income | $134,121 | | Change in fair value of equity securities, after taxes | ($22,611) | | Net realized investment gains, after taxes | ($107) | | Change in allowance for credit losses, after taxes | ($4) | | Net Operating Earnings | $111,399 | Underwriting Income Reconciliation This table reconciles GAAP Net Income to the non-GAAP measure of Underwriting Income to isolate core underwriting performance Reconciliation of Net Income to Underwriting Income (Q2 2025, in thousands) | Description | Amount | | :--- | :--- | | Net Income | $134,121 | | Add: Income tax expense | $34,168 | | Less: Net investment income & gains | ($75,230) | | Add: Interest and other expenses/income (net) | $2,399 | | Underwriting Income | $95,453 | Consolidated Financial Statements This section presents the company's unaudited consolidated financial statements, providing a detailed view of financial performance and position Consolidated Statements of Income The income statement details revenues and expenses for the six months ended June 30, 2025, showing total revenue growth and a net income of $223.3 million Six Months Ended June 30 (in thousands) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $893,211 | $757,344 | | Total Expenses | $612,611 | $525,677 | | Income Before Income Taxes | $280,600 | $231,667 | | Net Income | $223,348 | $191,520 | | Diluted EPS | $9.59 | $8.21 | Consolidated Balance Sheets The balance sheet shows a significant increase in total assets to $5.56 billion, primarily driven by growth in total investments and stockholders' equity Balance Sheet Summary (in thousands) | Line Item | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Investments | $4,481,315 | $3,954,681 | | Total Assets | $5,556,526 | $4,886,704 | | Total Liabilities | $3,833,953 | $3,403,143 | | Total Stockholders' Equity | $1,722,573 | $1,483,561 | Supplemental Information This section provides details for the upcoming investor conference call, a forward-looking statements disclaimer, and company contact information - A conference call to discuss the results is scheduled for Friday, July 25, 2025, at 9:00 a.m. Eastern Time[22] - The report includes forward-looking statements that involve risks and uncertainties which could cause actual results to differ materially[23][24]